This is an odd one, at least odd to me, one of my client wants to hire a live in care taker, after some research, it appears CRA wants a payoll account set up and do the proper source withholding. Just curious as to where to report the expenses, S4 or T2125 without any revenue.
Purpose of the caretaker? More detail required.
Medical (as in disability-related)? For self or dependant?
Household help or nanny, but not medical?
Not sure why either S4 or T2125 would apply.
That is a caregiver. I am an immigration license (RCIC) and I have done a lot of these for clients.
The householder needs a BN to hire the caregiver and to put her onto payroll.
With the BN, the T2125 allows deduction of wages and expenses that EI and CPP for the employer. Yeah. There is no revenues. It is what is required by IRCC.
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My thoughts as well. It may be not eligible as a deduction.
If it’s a medical expense, I expect CRA requires more than just your client’s assertion that help is needed. If it’s not health related, why do you think it’s any kind of a deduction? So, if I’m too busy or too lazy to clean my own house, or mow my own grass, then the rest of the country should kick in to help pay for it?? Crazy.
@ jeffliu “It appears CRA wants a payoll account set up and do the proper source withholding. Just curious as to where to report the expenses, S4 or T2125 without any revenue”
You are conflating two completely separate things that have nothing to do with each other.
Yes, any employer is required to set up a BN and do the proper source withholding.
No, there is nothing in your question that relates to the deductibility of anything anywhere on an income tax return.
“Caretaker” does not appear anywhere in the Income Tax Act.
You would need to be more specific.
IRCC does not administer Income Tax in Canada.
My first thought on reading the OP was “Symes”. (For those who don’t understand the reference, see 4 SCR 695, 1993.)
But it could be an in-home caregiver for a disability or other medically-required reason.
If it isn’t, chances are it’s non-deductible, non-creditable and is entirely paid for with after-tax dollars. And as one of the posters said, if the person hired is an immigrant, a BN is required. This has nothing to do with its deductibility and everything to do with ensuring that CPP, EI and Tax are deducted and paid as required by the parties involved.
It was to take care of elder parent, but no T2201,even though the parent is old. Not completely disable, CRA declined the disability, age alone wouldn’t be able to qualify for that. Attendant care was next thing I though, but it said maybe requires T2201, or maybe not, I guess. So when I saw it requires a business number to do the source withholding, I was curious on how that would work.
Interesting that I have a single person come back for tax returns.
There are people other than personal who hire the temporary workers as care givers. The program might a have been more for agencies which hire and render services to people with seniors in need
The care giver programs were in quite a bit of a flux becames there were programs for senior and those for taking care of kids. People were abusing the system and it was later required that they needed an LMIA and the hiring perons set up a BN and issue payroll. The payroll portion is more to track that the worker is not underpaid (eg cash) and that the government gets its taxes and CPP and EI are funded. There were care givers who were and still are being abused.
On a personal level, unless the person set up a company and have other things related it is pretty hard to deduct anything (imo) but the deducations are available for companies and have caregivers on payroll.
Many of them run other and does this and that at homes and condos. You really have to have an eye for what is happening. They might show up to take care of a particular senior once a week.
There is the careGIVER (not caretaker) credit which has a few requirements like disabiltiy.
When this started there this was kind of lax. Currently there is a business legitamacy requirement (wonder why? Someone wanted someone a PR $$$).
But the claim for someone is basically assume the person needs some sort of assisted living. So they can claim this as a form of DTC or Canada careGIVER credit.
For my payroll client they have to go to their BN and obtain the RP0001 number which is needed for payroll.
I do payroll and that scared the crap out of me the first time because there are lots of loses parts.
In Winnipeg, when clients apply for homecare and receive a homecare assessment, sometimes the client needs are too great for homecare to provide for this client. In these situations, I’ve spoken to clients who told me that they were directed by homecare to apply to CRA for a payroll business number and to hire someone to work in the home and pay them, including withholdings for CPP, EI, and taxes. They were told that they would then be able to submit their expenses to the Winnipeg Regional Health Authority or Shared Health for reimbursement of these expenses. Thus, if fully reimbursed, there would be nothing to claim on taxes as a medical expense.
My clients were all angered by this message, frustrated they would be talking on homecare’s job of managing their loved one’s home care (hiring, paying, supervising, etc) feeling that this should be homecare’s job.
I never dealt with one, but I heard clients who are registered nurses in BC, there are actually program with health care organization in BC that, the nurses take care of disabled patients at home, received compensation from the health organization, initially I thought it would be like business income, but then I was told, it’s tax free as agreed with the health organization usually run by the government. I wasn’t sure if that was legit, but now, thinking about it, maybe it’s just a simplied way of not claiming the caretaker, disability credit.